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Lean Manufacturing Articles

STEP TEN-COST CONTROL AND REDUCTION

   Step Ten, our final step to lean manufacturing success, is to translate improvements into bottom-line results. Yasuhiro Monden stated that, "The ultimate purpose of the Toyota production systems is to reduce costs re­lating to production. To do so, Toyota tries to eliminate production inefficiencies such as unnecessary inventories and workers." It is still surprising to find manufacturing leaders who do not know what it costs each day to operate his or her area. Success in a lean manufacturing environment requires each employee to be aware of their role in controlling and reducing costs. The manufacturing leaders are actively driving cost reduction, and each employee participates in cost reduction activities. The organization has shifted from a focus on labor costs and overhead absorption to customer service (quality, delivery, cost), cycle and lead times, asset turnover (inventory), flexibility (quick changeover, product development, change control), and total cost reduction. Key cost measures are defined, and the current status against the desired improvement end result is available to each employee.

SUMMARY

 

   We have examined ten steps to eliminating excessive inventories and increasing customer satisfaction. To summarize, the ten steps that lead to lean manufacturing are these:

      Leadership—instilling a customer focus

      Employee involvement—improving the capability of people

      Supplier co-destiny—nurturing a lifetime relationship with suppliers

      Quality at the source—holding each person account­
able for quality

      Visual workplace—setting an improvement foundation

      Productive maintenance—abolishing emergency
downtime

      Quick changeover—reducing setup time to minutes
or zero

      Pull production—meeting customer requirements
every time

      Cycle time—balancing workloads to meet customer
demand

      Cost reduction—eliminating non-value-added costs.
 

   The lean manufacturing practices focus a coordinated attack on waste and replaces waste with value that trans­lates to bottom line gains. Because numerical substan­tiation and documentation are required for the lean process, we now have a significant database to predict cost, savings, and bot­tom-line impact. Figure 3 shows how the benefits of lean manufacturing can make a positive impact on the income statement and balance sheet.

Is your company a candidate for lean manufacturing? Indicators of the need for lean manufacturing practices are rising inventory dollar trends, low in­ventory turns ratio, increasing space dedicated to inventory, and high or ris­ing excess and obsolete inventories dol­lars. Increasing customer quality and delivery requirements make a company an ideal candidate for lean manufactur­ing practices. Performance below competitors in product quality, delivery, and/or gross margin performance are indicators that immediate improvement actions are required, since the competition is most likely driving their next level of improvement.

In the very competitive contract electronics manufacturing industry, a Midwest company reduced the time to complete a product within their operation from 3.5 weeks to a maximum of two days by implementing lean manufacturing practices. Flexibility is a ticket to entry in the CEM industry. A produce distribution company increased their repackaging operation's output by 48 percent and reduced wasted product by over 70 percent. These gains were achieved by creating work cells linked to a continu­ous flow conveyor, improving timeliness and accuracy of information (including product cost), and installing a vi­sual workplace including performance metrics and im­provement targets. A manufacturer of sealing components reduced its cycle time by 58 percent after implementing lean manufacturing, and a data communication device manufacturer reduced its internal reject level by 85 percent after implementing lean. These successes from lean manufacturing implementations foster a winning environ­ment within a company. Winners know that when you get it right, you win! But remember one other thought from Henry Ford: "We shall never reach the point where what­ever we happen to be doing cannot be improved upon."

For the balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 14


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